81096 Federal Register / Vol. 75, No.
247 / Monday, December 27, 2010 / Rules and Regulations
domestic livestock and wildlife and
potential risks for spread of disease; and
(iii) Describe mitigation activities to
prevent the spread of B. abortus from
domestic livestock and/or wildlife, as
applicable, within or from the
brucellosis management area.
* * * * * exceed a volume threshold of $2.5
Herd blood test. A blood test for
brucellosis conducted in a herd on all
cattle or bison 6 months of age or over,
except steers and spayed heifers.
* * * * * Brian Doherty, Acting Senior Associate
Done in Washington, DC, this 17th day of
December 2010.
Kevin Shea,
Acting Administrator, Animal and Plant
Health Inspection Service.
[FR Doc. 2010–32371 Filed 12–22–10; 8:45 am]
BILLING CODE 3410–34–P
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Part 1281
RIN 2590–AA16
Federal Home Loan Bank Housing
Goals
AGENCY: Federal Housing Finance
Agency.
ACTION: Final rule.
SUMMARY: Section 1205 of the Housing
and Economic Recovery Act of 2008
(HERA) amended the Federal Home
Loan Bank Act (Bank Act) by adding a
new section 10C(a) that requires the
Director of the Federal Housing Finance
Agency (FHFA) to establish housing
goals with respect to the Federal Home
Loan Banks’ (Banks) purchase of
mortgages, if any. Section 10C(b)
provides that the Banks’ housing goals
are to be consistent with the housing
goals established by FHFA for the
Federal National Mortgage Association
(Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie
Mac) (collectively, the Enterprises)
under sections 1331 through 1334 of the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992
(Safety and Soundness Act), as amended
by HERA, taking into consideration the
unique mission and ownership structure
of the Banks.
To implement section 10C, FHFA is
adopting a final rule that is substantially
the same as the proposed rule published
erowe on DSK5CLS3C1PROD with RULES
by FHFA for notice and comment. The
final rule establishes three single-family
owner-occupied purchase money
mortgage goals and one single-family
refinancing mortgage goal applicable to
the Banks’ purchases of single-family
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
owner-occupied mortgages, if any,
under their Acquired Member Assets
(AMA) programs, consistent with the
single-family housing goals for the
Enterprises. A Bank will be subject to
the housing goals if its AMA-approved
mortgage purchases in a given year
billion.
DATES: This rule is effective January 26,
2011.
FOR FURTHER INFORMATION CONTACT:
Director, (202) 408–2991, Charles E.
McLean, Associate Director, (202) 408–
2537, or Rafe R. Ellison, Senior Program
Analyst, (202) 408–2968, Office of
Housing and Community Investment,
1625 Eye Street, NW., Washington, DC
20006. (These are not toll-free numbers.)
For legal matters, contact Kevin
Sheehan, Attorney, (202) 414–8952, or
Sharon Like, Managing Associate
General Counsel, (202) 414–8950, Office
of General Counsel, Federal Housing
Finance Agency, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552.
(These are not toll-free numbers.) The
telephone number for the
Telecommunications Device for the
Hearing Impaired is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
I. Background
A. Federal Home Loan Bank System
The Federal Home Loan Bank System
(System) was created by the Bank Act to
support mortgage lending and related
community investment. See 12 U.S.C.
1421 et seq. The System is composed of
12 Banks with more than 8,000 member
financial institutions, and the System’s
fiscal agent, the Office of Finance. The
Banks fulfill their statutory mission
primarily by providing secured loans
(called advances) to their members. The
Bank Act provides the Banks explicit
authority to make secured advances. 12
U.S.C. 1430(a). Advances provide
members with a source of funding for
mortgages and asset-liability
management, liquidity for a member’s
short-term needs, and additional funds
for housing finance and community
investment. Advances are collateralized
primarily by residential mortgage loans
and government and agency securities.
12 U.S.C. 1430(a)(3). Community
financial institutions (CFIs) (i.e.,
members with average total assets of
less than $1 billion (as adjusted
annually for inflation)) may also pledge
small business, small agriculture or
community development loans as
collateral for advances. 12 U.S.C.
1430(a)(3)(E).
Consolidated obligations, consisting
of bonds and discount notes, are the
PO 00000 Frm 00010 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
principal source for the Banks to fund
advances and investments. The Office of
Finance issues all consolidated
obligations on behalf of the 12 Banks.
Although each Bank is primarily liable
for the portion of consolidated
obligations corresponding to the
proceeds received by that Bank, each
Bank is also jointly and severally liable
with the other eleven Banks for the
payment of principal of, and interest on,
all consolidated obligations. See 12 CFR
966.9.
B. Bank AMA Programs
In July 2000, the Federal Housing
Finance Board (FHFB) adopted a final
regulation authorizing the Banks to
establish Acquired Member Assets
(AMA) programs. See 12 CFR part 955.
A Bank may participate in an AMA
program at its discretion; FHFA does
not have the authority to compel a Bank
to engage in any mortgage purchase
activities. Each Bank must receive
approval from FHFA pursuant to the
requirements for new business activities
in order to establish an AMA program.
See 12 CFR part 980. A majority of the
Banks have implemented AMA
programs pursuant to the AMA approval
authority.
In order for a Bank to acquire a
mortgage loan under an AMA program,
the loan must meet the requirements set
forth under a three-part test established
by the regulation. The three-part test
consists of: A loan type requirement; a
member or housing associate nexus
requirement; and a credit risk-sharing
requirement. 12 CFR 955.2. The AMA
regulation generally authorizes the
Banks to purchase conforming whole
loans on single-family residential real
property not more than 90 days
delinquent. In addition, the Banks are
authorized to purchase conforming
whole loans on single-family residential
real property regardless of delinquency
status if the loan is insured or
guaranteed by the U.S. government,
although such loans are not eligible to
be counted toward the Enterprises’
housing goals, as provided in the Safety
and Soundness Act.1 The Banks acquire
AMA from their participating members
1 See 12 U.S.C. 4562. For that reason, consistent
with the proposed rule, the final rule provides that
such loans are not eligible to be counted toward the
Banks’ housing goals either. The AMA regulation
also authorizes the Banks to purchase other real
estate-related collateral, including: second liens and
commercial real estate loans; small business, small
farm and small agri-business loans; whole loans
secured by manufactured housing regardless of
whether the housing qualifies as residential real
property; and state and local housing finance
agency bonds, subject to prior new business activity
approval by FHFA under 12 CFR part 980. See 12
CFR 955.2(a).
27DER1
 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
through either a purchase or funding
transaction. The Banks are not
authorized under the AMA programs to
securitize the mortgages they purchase.
To date, FHFA has approved two
AMA programs—the Mortgage
Partnership Finance (MPF) program and
the Mortgage Purchase Program (MPP)—
that authorize the Banks to purchase
only eligible single-family, fixed-rate
mortgages, including manufactured
housing loans, from participating
financial institution (PFI) members. The
Banks are not approved to purchase any
other types of mortgages under the AMA
programs, including mortgages secured
by multifamily properties. In operation,
the Banks have limited their AMA
programs to purchasing conforming,
conventional and government-insured
or -guaranteed fixed-rate whole first
mortgages on single-family residential
property with maturities ranging from 5
to 30 years. Banks have also purchased
participations in AMA-approved loan
pools after the original Bank acquired
the loans. As of June 30, 2010, the
combined value of the AMA mortgage
loans in the 12 Banks’ portfolios was
$67 billion, representing approximately
seven percent of the Banks’ total
combined assets. In contrast, the Banks’
outstanding advances, their primary
business line, totaled $540 billion as of
June 30, 2010, representing 58 percent
of the Banks’ total combined assets.2
The MPF and MPP programs are
designed such that the Banks manage
the interest-rate risk and the PFI
assumes a substantial portion of the
risks associated with originating the
mortgage, particularly the credit risk.
The AMA regulation requires that PFIs
provide credit enhancement to give the
mortgages the Banks purchase the credit
quality equivalent to an instrument
rated at least investment grade (the
fourth highest credit rating category or
triple-B), although the approved AMA
programs require PFIs to enhance the
loans to the second highest investment
grade (double-A). 12 CFR 955.3. The PFI
may provide this credit enhancement
through various means, such as
establishing a risk account to cover
losses in excess of a borrower’s equity
and primary mortgage insurance on
mortgages purchased by a Bank,
accepting direct liability to pay credit
losses up to a specified amount, or
entering into a contractual obligation to
provide supplemental mortgage
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guaranty insurance.
As previously noted, advances remain
the core business activity of the Banks
2 See‘‘Federal Home Loan Banks Second Quarter
2010 Combined Financial Report, Combined
Statement of Condition,’’ at 4.
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
and a principal means by which they
fulfill their mission. Participation in an
AMA program is elective. The
acquisition of AMA has presented
certain risk management challenges for
some Banks. The AMA are long-term,
fixed-rate loans, and the portfolio
requires careful attention to interest rate
risk management in order to match the
duration of assets and liabilities and to
adjust for loan prepayments. The Banks
must also competitively price their
product in the market without eroding
their own financial interest. Given these
challenges and in light of recent interest
rate and earnings volatility, several
Banks have scaled down their purchases
of AMA and returned to their core
products. After peaking in 2003, when
the Banks purchased over $91.2 billion
in AMA, annual AMA purchases have
steadily declined to an annualized
average of about $6.7 billion during the
period between 2006 and 2009. Several
Banks either have stopped accepting
additional master commitments to
purchase AMA from their members or
no longer accept delivery. In 2007, 2008
and 2009, the principal pay-down and
maturities of AMA held for portfolio
were greater than purchases and
funding of new loans held for portfolio.3
C. Bank Housing Goals Statutory
Provisions
Section 10C(a) of the Bank Act, as
amended by HERA, requires the
Director of FHFA to ‘‘establish housing
goals with respect to the purchase of
mortgages, if any, by the [Banks],’’
which ‘‘shall be consistent with the
goals established under sections 1331
through 1334 of the [Safety and
Soundness Act, as amended].’’ 12 U.S.C.
1430c(a). Section 10C(b) provides that,
in establishing the goals for the Banks,
‘‘the Director shall consider the unique
mission and ownership structure of the
[Banks].’’ 12 U.S.C. 1430c(b). In
addition, section 10C(c) provides that,
‘‘to facilitate an orderly transition,’’ the
Director shall establish interim target
goals for the purchase of mortgages by
the Banks for the calendar years 2009
and 2010. 12 U.S.C. 1430c(c). Section
10C(d) provides that the monitoring and
enforcement requirements of section
1336 of the Safety and Soundness Act
shall apply to the Banks in the same
manner and to the same extent as they
apply to the Enterprises. 12 U.S.C.
1430c(d). Section 10C(e) requires the
Director to annually report to Congress
on the performance of the Banks in
3 See ‘‘Federal Home Loan Banks Combined
Financial Report for 2008’’ at 78–80, and ‘‘Federal
Home Loan Banks Combined Financial Report for
2009’’ at 55–56.
PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
81097
meeting the housing goals under section
10C. 12 U.S.C. 1430c(e).
Sections 1331 through 1333 of the
Safety and Soundness Act, as amended
by HERA, require the Director of FHFA
to establish new housing goals effective
for 2010 and beyond for the Enterprises.
The new Enterprise housing goals
include four goals for conventional
conforming single-family owner-
occupied housing, one multifamily
special affordable housing goal, and one
multifamily special affordable housing
subgoal. See 12 U.S.C. 4561, 4563(a)(2).
The single-family housing goals target
purchase money mortgages for low-
income families,4 families that reside in
low-income areas,5 and very low-
income families,6 and refinancing
mortgages for low-income families. See
12 U.S.C. 4562. The multifamily special
affordable housing goal targets
multifamily housing affordable to low-
income families, and the multifamily
special affordable housing subgoal
targets multifamily housing affordable
to very low-income families. See 12
U.S.C. 4563. In a separate rulemaking,
FHFA has published in the Federal
Register a final rule for the new housing
goals for the Enterprises for 2010 and
2011 pursuant to the requirements of
sections 1331 through 1333 of the Safety
and Soundness Act, as amended. 75 FR
55892 (Sept. 14, 2010).
D. Banks’ and Enterprises’ Differences
Section 1313 of the Safety and
Soundness Act, as amended, 12 U.S.C.
4513(f), requires the Director of FHFA to
consider the differences between the
Banks and the Enterprises whenever
promulgating regulations that affect the
Banks. In preparing the final rule,
pursuant to section 1313, the Director
considered the differences between the
Banks and the Enterprises with respect
to the Banks’ cooperative ownership
structure, mission of providing liquidity
to members, affordable housing and
community development mission,
capital structure, and joint and several
liability, and determined that the final
rule is appropriate. As described below,
there are significant differences between
the Enterprise housing goals and the
Bank housing goals—including
4 ‘‘Low-income’’ is defined as income not in
excess of 80 percent of area median income. See 12
U.S.C. 4502(14).
5 ‘‘Families in low-income areas’’ is defined to
include families living in census tracts where the
median income does not exceed 80 percent of the
area median income and families with incomes not
in excess of the area median income that either live
in a minority census tract or in a designated disaster
area. See 12 U.S.C. 4502(28).
6 ‘‘Very low-income’’ is defined as income not in
excess of 50 percent of area median income. See 12
U.S.C. 4502(24).
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 81098 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
establishing a volume threshold for the
Banks to avoid adverse impact on Bank
AMA programs, particularly with
respect to CFIs that are PFIs—that
recognize the significant differences
between the Banks’ businesses and
purposes and those of the Enterprises.
Each Bank is a cooperative owned by
financial institution members that act as
both owners and customers of the
cooperative. Members, as owners, are
entitled to receive shares of the
cooperative’s earnings and access to the
cooperative’s products and services,
including the AMA programs. A Bank is
authorized to serve only members of its
cooperative, and, as discussed above, its
primary business is providing advances
to its members.
Fannie Mae and Freddie Mac have
been owned by investors through their
holdings of preferred or common stock
shares since 1968 and 1989,
respectively. An Enterprise’s primary
business is securitizing mortgages
originated by financial institutions, and
guaranteeing the timely payment of
erowe on DSK5CLS3C1PROD with RULES
II. Proposed Rule
On May 28, 2010, FHFA published in
the Federal Register a proposed rule to
establish new housing goals for the
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
principal and interest on the mortgage-
backed securities (MBS). The
Enterprises also purchase mortgages for
their mortgage portfolios. FHFA has
instructed the Enterprises to
significantly reduce the size of their
mortgage portfolios over time. The
Banks are restricted to purchasing loans
from their members, most of which are
regulated depositories. By contrast, the
Enterprises have access to a broad,
nationwide network of financial
institutions from which they purchase
mortgages. Also, unlike the Banks, for
which participation in the AMA is an
elective activity, the fundamental
statutory purpose of the Enterprises is to
bring stability in the secondary market
for residential mortgages by purchasing
and making commitments to purchase
residential mortgages. See 12 U.S.C.
1451 note; 12 U.S.C. 1716.
The Banks’ and Enterprises’ different
ownership structures and associated
statutory restrictions in the Bank Act
and the Federal National Mortgage
Banks. The 45-day comment period
closed July 12, 2010. See 75 FR 29947
(May 28, 2010). FHFA received a total
of 9 comment letters on the proposed
PO 00000 Frm 00012 Fmt 4700 Sfmt 4700
Association Charter Act and the Federal
Home Loan Mortgage Corporation Act
(together, the Charter Acts),
respectively, have a significant impact
on their respective mortgage purchase
activities. The Enterprises’ mortgage
purchase activities are substantially
greater than that of the Banks. In
calendar year 2009, the Banks’
combined number of single-family
mortgage purchases was slightly over
48,000, while Fannie Mae purchased
approximately 3.51 million single-
family mortgages and Freddie Mac
purchased approximately 2.42 million
single-family mortgages. The disparity
between the Banks’ and Enterprises’
mortgage purchase businesses was great
even during the peak years of the AMA
programs. In 2003, the Banks purchased
approximately 606,000 single-family
mortgages, which was only 4.3 percent
of the approximately 14.02 million
single-family mortgages purchased by
the Enterprises in that year (see Figure
1).
rule. Five of the comment letters were
from Banks, one was from a not-for-
profit organization, two were from trade
EP27DE10.000</GPH>
E:\FR\FM\27DER1.SGM 27DER1
 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
associations, and one was from a
corporation.
FHFA has considered all of the
comments on the proposed rule and has
determined to adopt a final rule that is
substantially the same as the proposed
rule. The comments are discussed below
in the Analysis of Final Rule section.
Comments that raised issues beyond the
scope of the proposed rule are not
addressed in this final rule, but may be
considered by FHFA at a future date.
III. Applicability of Bank Housing
Goals to 2011 and Beyond
HERA requires FHFA to establish
2009 and 2010 interim target housing
goals for the Banks that facilitate an
orderly transition and are consistent
with those of the Enterprises. In order
to facilitate an orderly transition, the
final rule establishes housing goals for
2011 and beyond. The Banks’ unique
ownership structure and mission is such
that FHFA needed to add criteria to the
Bank housing goals that are not
necessary for those of the Enterprises,
and FHFA required additional time to
develop those criteria. The Banks’
administrative and monitoring
challenges will be reduced by enabling
the Banks to establish policies and
procedures to meet the housing goals
requirements with the knowledge that
these requirements will not be changed
the following year. FHFA believes this
approach will facilitate an orderly
transition to housing goals.
IV. Summary of Final Rule
A. Market-Based Housing Goals
Consistent with the proposed rule, the
final rule establishes market-based
single-family housing goals for the
Banks in a manner largely consistent
with the market-based single-family
housing goals for the Enterprises.
Separate goals are established for AMA-
approved mortgages on owner-occupied
single-family housing. The goals for
purchase money mortgages separately
measure performance on purchase
money mortgages for low-income
families, for families in low-income
areas, and for very low-income families.
The goal for refinancing mortgages
measures performance on refinancing
mortgages for low-income families.
The final rule does not establish
benchmark levels to measure the Banks’
housing goals performance. The Banks’
performance under the housing goals
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will be measured relative to the actual
goals-qualifying shares of the district-
level primary mortgage market during
the year in their districts. FHFA will
calculate the actual goals-qualifying
shares of the market using all mortgages
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
originated in the geographic boundaries
of each Bank district (meaning that the
properties securing the mortgages are
located in the district), including
mortgages originated both by members
and non-members.
A Bank meets a housing goal if its
annual performance meets or exceeds
the actual share of the market in that
district that fits the criteria for a
particular housing goal for that year. A
Bank fails to meet a housing goal if it
falls short of the actual market share for
that goal in that year. All mortgages
purchased by a Bank that meet the
requirements of the final rule will count
toward the Bank’s goal performance,
regardless of where the properties
securing the mortgages are located, but
the market share against which the
Bank’s performance will be evaluated
will be the market share of mortgages
secured by properties located in the
district, as described above. The
housing goals do not apply to an
individual Bank unless it has exceeded
the $2.5 billion volume threshold.
B. Volume Threshold
Consistent with the proposed rule, the
final rule establishes a dollar volume
threshold of $2.5 billion that a Bank’s
total unpaid principal balance (UPB) of
AMA-approved mortgage purchases in a
given year must exceed before the Bank
is subject to the housing goals. The
volume threshold recognizes the Banks’
unique mission and ownership structure
and the current status of the AMA
programs, specifically, their mission to
provide liquidity to their members.
V. Analysis of Final Rule
A. Definitions—§ 1281.1
The final rule sets forth definitions
applicable to the Bank housing goals
provisions. A number of the definitions
are the same as those applicable to the
Enterprise housing goals, and other
definitions were modified to reflect
their applicability to the Banks’ AMA
programs.
‘‘Designated disaster area.’’ The
definition of ‘‘families in low-income
areas’’ includes families with incomes at
or below 100 percent of area median
income (AMI) who reside in ‘‘designated
disaster areas.’’ The final rule defines
‘‘designated disaster area’’ as any census
tract that is located in a county
designated by the Federal Government
as adversely affected by a declared
major disaster administered by the
Federal Emergency Management Agency
(FEMA), where individual assistance
payments were authorized by FEMA. In
order to remain consistent with the
revised definition in the final 2010–
PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
81099
2011 Enterprise housing goals rule, the
final Bank housing goals rule definition
does not include the proposed
requirement that average damage
severity, as reported by FEMA, exceed
$1,000 per household in a census tract.
Disaster areas are declared when an
area is adversely affected by some
unforeseen event. However, not all
disasters impact housing to the same
degree, and the severity of the impact
varies within the declared area.
Presidential Major Disaster Declarations
are defined by FEMA at the county level
in the area affected by the major disaster
and can be declared to be eligible for
public assistance, individual assistance,
or both. Public assistance is available to
local governments for the repair,
replacement, or clean-up of public
infrastructure. Individual assistance is
broken down further into two
categories, housing needs and ‘‘other
than housing needs.’’ 7 Housing needs
include repair, replacement, and
construction of homeowner residences.
Consistent with the proposed rule and
with the Community Reinvestment Act
(CRA), the final rule limits the
definition of ‘‘designated disaster areas’’
to those counties eligible for individual
assistance.
For purposes of complying with CRA,
regulators have made the determination
that ‘‘[e]xaminers will consider
institution activities related to disaster
recovery that revitalize or stabilize a
designated disaster area for 36 months
following the date of designation. Where
there is a demonstrable community
need to extend the period for
recognizing revitalization or
stabilization activities in a particular
disaster area to assist in long-term
recovery efforts, this time period may be
extended.’’ 8 To accommodate the Banks’
business planning requirements, for
purposes of the low-income areas
housing goal, the final rule, consistent
with the proposed rule, will treat a
designated disaster area as effective
beginning on the January 1 after the
FEMA designation of the county and
continuing through December 31 of the
third full calendar year following the
FEMA designation. If data are available
in a particular case to support treatment
as a designated disaster area from an
earlier date or for a longer period of
7 Federally declared disaster areas are managed
by FEMA and can be tracked at FEMA’s Web site.
See http://www.fema.gov/news/disasters.fema.
8 The Department of the Treasury, the Federal
Reserve Board and the Federal Deposit Insurance
Corporation, Community Reinvestment Act;
Interagency Questions and Answers Regarding
Community Reinvestment; Notice, 74 FR 498, 509
(Jan. 6, 2009).
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 81100 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
time, FHFA may provide for such
treatment by notice to the Banks.
‘‘Families in low-income areas.’’
Consistent with the proposed rule, the
definition of ‘‘families in low-income
areas’’ in the final rule includes families
with incomes at or below 100 percent of
AMI who reside in ‘‘minority census
tracts,’’ which is defined by the Safety
and Soundness Act to mean a census
tract that has a minority population of
at least 30 percent and a median family
income of less than 100 percent of AMI.
12 U.S.C. 4502(29). In addition, the
definition of ‘‘families in low-income
areas’’ includes families with incomes at
or below 100 percent of AMI who reside
in ‘‘designated disaster areas.’’
‘‘Mortgage.’’ Consistent with the
proposed rule and the final Enterprise
2010–2011 housing goals rule, the
definition of ‘‘mortgage’’ in the final rule
does not include personal property
manufactured housing loans. Therefore,
any purchases of personal property
manufactured housing loans will not
qualify for credit under the Bank
housing goals.
‘‘Mortgage purchase.’’ Consistent with
the proposed rule, the final rule defines
‘‘mortgage purchase’’ as a transaction in
which a Bank bought or otherwise
acquired a mortgage. The Banks
commented that the phrase ‘‘otherwise
acquired a mortgage’’ is overly broad
and could be read to include the Banks’
Affordable Housing Program (AHP) and
collateral received from members. The
Banks requested that FHFA clarify the
definition to mean a transaction in
which a Bank bought or otherwise
acquired a mortgage pursuant to the
Bank’s authority under the AMA
regulation. The final rule does not limit
the definition of ‘‘mortgage purchase’’ to
mean only purchases of AMA-approved
mortgages, because the types of
mortgage purchases that are covered by
the Bank housing goals are set out in
§ 1281.11. That section provides that the
Bank housing goals are limited to
purchases of AMA-approved mortgages.
‘‘Refinancing mortgage.’’ Consistent
with the final Enterprise 2010–2011
housing goals rule, the definition of
‘‘refinancing mortgage’’ in the final Bank
housing goals rule provides that changes
to a loan as a result of a workout
agreement generally will not be treated
as a separate refinancing mortgage. The
proposed Bank housing goals rule did
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not address workout agreements in the
definition ‘‘refinancing mortgage,’’ but
the provision is included in the final
rule to maintain consistency with the
long-standing definition of ‘‘refinancing’’
under the Enterprise housing goals.
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
B. Housing Goals—Proposed §§ 1281.10
and 1281.11
General. Consistent with the proposed
rule, § 1281.10 of the final rule provides
an overview of the contents of this
subpart. FHFA will evaluate Bank
performance under the housing goals
established for 2010 on a calendar year
basis.
Volume Threshold. Consistent with
the proposed rule, § 1281.11(a) of the
final rule establishes a volume threshold
that will trigger application of the
housing goals to a Bank. Specifically, a
Bank that in a calendar year purchased
AMA-approved mortgages with a total
UPB greater than $2.5 billion will be
subject to the housing goals for that
year, a threshold that FHFA selected as
one which would result in goals being
applied to substantial AMA programs,
of a size that a number of Banks have
operated in the past, while enabling
small programs, which might serve as
mortgage sales outlets for CFIs, to
operate without compliance burdens
that might cause them to be abandoned.
To illustrate the magnitude of this
volume threshold, it is currently equal
to approximately 0.25 percent of the
overall single-family market, which
equaled $986 billion (approximately
$1.0 trillion). (FHFA arrived at this
estimate of the size of the market by
using 2008 HMDA mortgage origination
data to calculate the total UPB of
conforming, first lien mortgages
originated in 2008 that were secured by
owner-occupied, single-family
residences. Mortgages for home
improvement and Home Ownership and
Equity Protection Act (HOEPA)
mortgages were excluded to be
consistent with the market estimate
approach for the Enterprise housing
goals.) Looking at this threshold another
way, assuming that the average UPB of
the mortgages a Bank purchases equals
$200,000, a Bank would need to
purchase only 12,500 mortgages in a
given year to meet the volume
threshold. In FHFA’s view, below this
threshold it would be challenging for
Banks to ensure that the small numbers
of AMA mortgages purchased—in
transactions that the Banks do not
themselves initiate—are representative
of the market and include sufficient
affordable mortgages to meet housing
goals.
FHFA requested comment on whether
a volume threshold should apply,
whether the proposed volume threshold
of $2.5 billion is appropriate, whether a
higher or lower threshold should apply,
and whether the volume threshold
alternatives discussed in the proposed
rule or any other alternatives might be
PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
used. The Banks recommended
establishing a volume threshold at $5.0
billion, or on a sliding scale up to $5
billion, if the Bank met specified
qualitative factors that serve the Banks’
housing mission, such as a Bank’s
purchase of Federal Housing
Administration (FHA) or U.S.
Department of Veterans Affairs (VA)
mortgages and its use of Bank AHP
funds in conjunction with AMA
mortgage purchases. The Banks stated
that applying a higher threshold to
Banks that met such qualitative
measures would encourage the Banks to
be accountable to their housing mission.
The Banks also recommended that
mortgages purchased from CFIs be
excluded when determining whether a
Bank exceeded the volume threshold.
Finally, the Banks commented that
because a Bank may not know until the
fourth quarter whether it will exceed the
volume threshold that year, the housing
goals should apply to a Bank only in the
year following the year for which the
Bank exceeded the volume threshold.
A trade association recommended
establishing a volume threshold of 6,000
AMA-approved mortgages purchased
annually. Assuming that the average
UPB of the mortgages a Bank purchases
equals $200,000, the volume threshold
would be equivalent to $1.2 billion. A
not-for-profit organization
recommended that there be no volume
threshold.
FHFA has considered the comments
on the proposed $2.5 billion volume
threshold and concluded that this
volume threshold will adequately
balance the Banks’ missions to support
affordable housing and to provide
liquidity to CFIs. The volume threshold
is intended in part to ensure that Banks
with significant AMA volume in any
year are subject to the housing goals. For
that reason, the Bank housing goals will
apply in the same calendar year for
which a Bank exceeded the volume
threshold. In determining whether the
proposed $2.5 billion is an appropriate
level for the volume threshold, FHFA
considered the volume of mortgages
purchased by the Banks over the past
decade. From 2002 to 2004, when the
Banks had their largest presence in the
national market, a number of Banks had
annual volumes of AMA-approved
mortgages greater than $2.5 billion:
seven Banks in 2002, eight Banks in
2003 and four Banks in 2004. A
significant percentage of Banks’ annual
volume of AMA-approved mortgage
purchases exceeded $5.0 billion in 2002
and 2003: four Banks in 2002 and seven
Banks in 2003. Annual volumes of
AMA-approved mortgages were
significantly lower from 2005 to 2009.
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 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
Although a few Banks had annual
volumes exceeding $2.5 billion during
that period, none of the Banks exceeded
an annual volume of $5.0 billion. (See
Table 1.)
Based on this analysis of the volume
of the Banks’ AMA-approved mortgage
The volume threshold is also
intended to ensure that Banks with a
relatively low annual volume of
purchases of AMA-approved mortgages,
i.e., $2.5 billion or less, can continue to
serve CFIs without being subject to the
housing goals. Several Banks offer their
AMA programs as a service to CFIs,
which is consistent with their mission
to provide liquidity to their members.
FHFA set the volume threshold at an
amount that would ensure that the
housing goals would not cause the
Banks that offer AMA programs
primarily to service CFIs to discontinue
their programs. The AMA programs are
an important source of liquidity for such
CFIs, and the discontinuance of an
AMA program could adversely impact
CFIs, such as those in rural areas, that
may have limited or no access to the
secondary market because of the higher
per-mortgage sales cost associated with
delivering a relatively small number of
mortgages to purchasers, or the inability
of these CFIs to meet purchasers’
mortgage servicing requirements.
Because the volume threshold already
limits the impact of the housing goals
on a Bank with an AMA program
focused on its small members, the final
rule does not exclude mortgages
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purchased from CFIs from counting for
purposes of the volume threshold.
Market-Based Housing Goals.
Consistent with the proposed rule,
§ 1281.11(b) of the final rule provides
that compliance with the housing goals
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
purchases, a volume threshold of $2.5
billion is mid-way between the higher
volume threshold of $5.0 billion and
housing goals that would apply without
regard to the volume of mortgages
purchased by the Bank. Increasing the
volume threshold above $2.5 billion
will be measured by comparing a Bank’s
performance with the actual goals-
qualifying shares of the primary market
during the year in the Bank’s district.
Under this retrospective, market-based
approach, FHFA will calculate the
actual goals-qualifying shares of the
district-level primary mortgage market
during the year using all mortgages
originated in the geographic boundaries
of each Bank district (meaning that the
properties securing the mortgages are
located in the district), including
mortgages originated both by members
and non-members. The Enterprise
housing goals rule includes both this
market-based approach and specific
benchmark housing goal levels for the
Enterprises. Under the Bank housing
goals rule, a Bank’s performance will
not be measured against specific
benchmark levels. Several provisions in
the Enterprise housing goals rule that
relate to the benchmark housing goal
levels have been omitted from the Bank
housing goals rule as unnecessary in
light of the retrospective, market-based
approach.
As noted in the proposed rule, FHFA
believes that the advantages of
comparing the Bank’s performance to
actual market performance outweigh the
disadvantages. A more detailed
discussion of the market-based
approach is included in the final
Enterprise 2010–2011 housing goals
rule. See 75 FR at 55896–55898. The
market size analysis used to establish
PO 00000 Frm 00015 Fmt 4700 Sfmt 4700
81101
would unnecessarily reduce the
likelihood that a Bank would be subject
to housing goals in the future and would
not meet the intent of Congress that the
Banks be subject to housing goals, as
reflected in HERA.
the benchmark levels for the Enterprise
housing goals does not reflect
differences between the various Bank
districts. The difficulties in accurately
predicting the size of the market for
each housing goal in each Bank district
make it impractical to set meaningful
annual benchmark levels for each Bank.
A disadvantage of the market-based
approach is that public information on
the goal-qualifying shares of the single-
family primary mortgage market is not
available until the release of Home
Mortgage Disclosure Act (HMDA) data
in late summer of the following year.
However, a Bank that is subject to the
housing goals will be active in the
mortgage market in its district and
hence positioned to understand how its
performance is likely to compare to the
overall market in its district.
In the proposed rule, FHFA discussed
other possible alternatives for measuring
market size that had been considered
and rejected. The Banks recommended
using a market measurement that is
limited to mortgages that are similar to
the types of mortgages a Bank might
purchase under its AMA program,
namely, prime, fixed rate, fully
amortizing mortgage loans that are
originated by regulated depository
institutions in the member’s district and
that are intended for sale in the
secondary market. However, FHFA has
determined that a more inclusive
measurement of the market will provide
EP27DE10.001</GPH>
a better basis for evaluating the extent
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 81102 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
to which a Bank’s purchases under its
AMA program address mortgage credit
needs in the Bank’s district.
The Banks also recommended that
mortgages purchased from CFIs be
excluded from consideration under the
Bank housing goals because such
mortgages are not represented in the
HMDA data used to measure the size of
the market. The Banks recommended
that such loans also be excluded when
determining whether a Bank exceeded
the volume threshold and when
measuring a Bank’s actual performance
under the housing goals. The final rule
does not exclude mortgages purchased
from CFIs from consideration under the
housing goals. As discussed above, the
volume threshold already limits the
impact of the housing goals on a Bank
with an AMA program focused on its
small members. In addition, removing
all mortgages purchased from CFIs from
consideration under the housing goals
would lead to an inaccurate measure of
the extent to which a Bank’s purchases
of AMA-approved mortgages meet the
housing goals.
Consistent with the proposed rule, the
final rule does not establish benchmark
levels to measure the Banks’
performance under the housing goals.
FHFA requested comment on whether it
would be appropriate to establish
benchmark levels as a means of
measuring the Banks’ housing goals
performance, in addition to measuring
performance based on a Bank’s actual
share of goal-qualifying mortgages
relative to its district-level market share,
and if so, whether it would be
appropriate to set benchmark levels for
the Bank housing goals equal to the
benchmark levels for the Enterprise
housing goals. The comments did not
specifically address establishing
benchmark levels for the Banks,
although a trade association suggested
that the Banks should be encouraged to
exceed the market share.
FHFA has concluded that it would be
inappropriate to set benchmark levels
for the Banks equal to the benchmark
levels for the corresponding Enterprise
housing goals, because the Enterprise
benchmarks are based on national
mortgage market estimates and no Bank
has an AMA program with a national
scope. In addition, FHFA has concluded
that setting benchmark levels based on
district-level market size estimates
would be inappropriate because the
market sizes cannot be reliably
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estimated in advance.
Section 1281.11(b) establishes criteria
for determining the size of the market
for each Bank district based on HMDA
data on mortgages secured by property
located in that Bank district. The criteria
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
for establishing the size of the market
reflect the types of mortgages that will
count for purposes of the housing goals
and that are typically eligible for
purchase by a Bank. The criteria are the
same as those in the proposed rule
except for the definition of higher-
priced loan to be used in the
measurement of market size. The
proposed rule would have excluded
from the measurement of the market any
mortgages with rate spreads of 300 basis
points or more above the applicable
Average Prime Offer Rate (APOR)
reported under HMDA. Consistent with
the definition in the final Enterprise
2010–2011 housing goals rule, for
purposes of measuring the market for
each Bank district, mortgages with rate
spreads of 150 basis points above the
applicable APOR reported under HMDA
will be excluded. The 150 basis point
rate spread is consistent with the
definition of higher-priced loan used by
the Federal Reserve Board.
Bank Housing Goals. Consistent with
the proposed rule, § 1281.11(c) through
1281.11(f) of the final rule establishes
four single-family housing goals
applicable to any Bank that exceeds the
volume threshold in a particular year.
Goals are established for purchase
money mortgages for low-income
families, for families in low-income
areas, and for very low-income families.
In addition, a goal is established for
refinancing mortgages for low-income
families. The single-family housing
goals will be based on an evaluation of
the Bank’s performance relative to the
market for each housing goal in each
year. The Banks have not been approved
to purchase multifamily loans under the
AMA programs. Accordingly, unlike the
new Enterprise housing goals, the Bank
housing goals do not include a
multifamily special affordable housing
goal or multifamily special affordable
housing subgoal.
Two commenters recommended
expanding the coverage of the Bank
housing goals beyond the scope of the
Enterprise housing goals. A not-for-
profit organization recommended that
FHFA give Bank housing goals credit for
rental units in single-family properties,
stating that such units provide an
important source of affordable housing.
A trade association suggested that FHFA
consider adding a neighborhood goal for
refinance lending, in addition to the
borrower goal. In order to remain
consistent with the Enterprise housing
goals, the final rule does not alter the
basic structure of the proposed Bank
housing goals. The Bank housing goals
do not include any investor-owned
single-family properties, and they do
not provide additional credit for any
PO 00000 Frm 00016 Fmt 4700 Sfmt 4700
rental units in owner-occupied single-
family properties. The Bank housing
goals also do not include a separate goal
for refinancing mortgages in low-income
areas.
In contrast to the new Enterprise
housing goals, the Bank housing goals
also do not include a low-income areas
subgoal. Because the Bank housing goals
do not include benchmark levels set
prospectively, there is no need for a
separate subgoal to address the
unpredictable impact designated
disaster areas may have from year to
year.
C. General Counting Requirements—
§ 1281.12
Consistent with the proposed rule,
§ 1281.12 of the final rule sets forth
general requirements for the counting of
Bank AMA-approved mortgage
purchases toward the achievement of
the housing goals. Performance under
the housing goals will be evaluated
based on the percentage of all AMA-
approved mortgages on single-family,
owner-occupied properties purchased
by a Bank that meet a particular goal.
As proposed, § 1281.12(a) of the final
rule provides that performance under
each of the single-family housing goals
shall be measured using a fraction that
is converted into a percentage. Neither
the numerator nor the denominator
shall include Bank transactions or
activities that are not AMA-approved
mortgage purchases as defined by FHFA
or that are specifically excluded as
ineligible under § 1281.13(b). The
numerator is the number of AMA-
approved mortgage purchases of a Bank
in a particular year that finance owner-
occupied single-family properties that
count toward achievement of a
particular housing goal. The
denominator is the total number of
AMA-approved mortgage purchases of a
Bank in a particular year that finance
owner-occupied, single-family
properties.
As proposed, § 1281.12(b) of the final
rule provides that when a Bank lacks
sufficient data or information, e.g.,
income of mortgagor, to determine
whether the purchase of a mortgage
counts toward achievement of a
particular housing goal, that mortgage
purchase shall be included in the
denominator for that housing goal, but
may not be included in the numerator.
The Banks may not use missing data
estimation methodologies, as used by
the Enterprises, in light of the
complexity of developing an estimation
methodology suitable for the Banks.
FHFA invited comment on whether a
method for estimating missing
affordability data would be feasible for
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 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
the Bank housing goals but did not
receive comments on this issue.
The provisions in § 1281.12(c)
through (f), which address credit toward
multiple goals, application of median
income, sampling and newly available
data, respectively, are consistent with
the provisions in the proposed rule and
the final Enterprise 2010–2011 housing
goals rule.
The MPF program allows Banks to
purchase a percentage of a mortgage or
mortgage pool initially acquired by
another Bank under the program. As
discussed in the proposed rule, for
purposes of receiving credit under one
of the housing goals, each mortgage will
be assigned to the Bank that initially
acquired the mortgage regardless of
whether an interest in the mortgage was
later sold to another Bank.
In September 2008, FHFA approved
the Chicago Bank’s request to establish
the MPF Xtra program, under which the
Bank would buy certain qualified,
conforming mortgages from eligible
members for immediate sale to Fannie
Mae. As discussed in the proposed rule,
the MPF Xtra program is not an AMA
program authorized under 12 CFR part
955.9 Under the MPF Xtra program, the
Bank serves essentially as a conduit or
intermediary with respect to the sale of
the mortgages to Fannie Mae. The
mortgages may be counted by Fannie
Mae toward compliance with its
housing goals. If the mortgages were
also to be considered for purposes of the
Bank housing goals, double-counting of
the mortgages could occur. Avoiding
double-counting of mortgage purchases
is consistent with the Enterprise
housing goals. An Enterprise cannot
receive credit towards a housing goal for
a mortgage purchase if the other
Enterprise received credit for that
mortgage. Additionally, under the
Enterprise housing goals, credit towards
a housing goal is only awarded for a
mortgage where the Enterprise
purchases the mortgage or assumes the
credit risks associated with the
mortgage. The Bank does not fund MPF
Xtra mortgages or assume any credit
risks in MPF Xtra transactions. For these
reasons, under the final rule, mortgages
9 In May 2007, FHFB also approved the Atlanta
Bank’s request to offer the Global Mortgage Alliance
Program (GMAP), under which the Bank would
facilitate the sale of certain qualified conforming
mortgage loans from eligible members to another of
its members—Global Mortgage Alliance, LLC,
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which would then securitize those loans. To date,
no transactions have occurred under GMAP. The
GMAP is not an AMA program authorized under
part 955. Both the MPF Xtra and GMAP programs
were separately authorized under the Banks’
incidental authority contained in sections 11(a) and
11(e)(1) of the Bank Act. See 12 U.S.C. 1431(a),
1431(e)(1).
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001 PO 00000
purchased by a Bank pursuant to the
MPF Xtra program will not be
considered for purposes of the Bank
housing goals.
D. Special Counting Requirements—
§ 1281.13
Consistent with the proposed rule,
§ 1281.13 of the final rule sets forth
special counting requirements for the
receipt of full, partial or no credit for a
transaction toward achievement of the
housing goals, a number of which are
discussed further below.
Section 1281.13(b) specifies the types
of transactions that shall not be counted
for purposes of the housing goals and
shall not be included in the numerator
or the denominator in calculating a
Bank’s performance under the housing
goals. The intent of this section is to
specify the counting treatment for
transactions in which the Banks are
authorized to engage under the
approved AMA programs. The counting
rules do not purport to authorize the
purchase of any types of mortgages, but
are intended solely to indicate whether
such mortgages shall receive full, partial
or no credit toward the housing goals.
Accordingly, transactions in which the
Banks are not authorized to engage
under the approved AMA programs are
not included in paragraph (b). The Bank
counting rules differ in some respects
from the counting rules for the
Enterprise housing goals. For example,
the Banks are not authorized to
purchase private label securities (PLS)
under the AMA programs; therefore it is
not necessary to exclude PLS from
counting under the Bank housing goals.
On the other hand, while the Banks are
authorized to purchase non-
conventional loans under the AMA
authority, such loans are excluded from
counting under the Enterprise housing
goals and, therefore, have been excluded
from counting under the Bank housing
goals as well.
Section 1281.13(b) of the final rule
makes clear that where a mortgage falls
within one of the categories excluded
from consideration under the housing
goals, the mortgage shall be excluded
even if it otherwise falls within one of
the special counting rules in
§ 1281.13(c). For example, a non-
conventional mortgage that would be
excluded from consideration pursuant
to § 1281.13(b)(1) cannot be counted
even if it otherwise counts as a seasoned
mortgage under § 1281.13(c)(2).
Home Equity Conversion Mortgages.
Section 1281.13(b)(1) of the final rule
excludes the purchases of all non-
conventional single-family mortgages,
including Home Equity Conversion
Mortgages (HECMs), from counting
Frm 00017 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
81103
towards the Banks’ housing goals—that
is, such purchases shall be excluded
from both the numerator and
denominator in calculating goal
performance. This is consistent with the
counting treatment for the new
Enterprise housing goals, as HERA
amended section 1332(a) of the Safety
and Soundness Act to restrict the
Enterprise single-family housing goals
to include only conventional mortgages.
See 12 U.S.C. 4562(a).
Mortgages financing secondary
residences. Section 1281.13(b)(6) of the
final rule prohibits the counting of
mortgage purchases to the extent they
finance any dwelling units that are
secondary residences. This is consistent
with the counting treatment for the new
Enterprise housing goals, as HERA
amended section 1332(a) of the Safety
and Soundness Act to restrict the
Enterprise single-family housing goals
to include only purchases of owner-
occupied mortgages. See 12 U.S.C. 4562.
Subordinate liens. Section
1281.13(b)(8) of the final rule excludes
the purchases of subordinate lien
mortgages (second mortgages) from
counting towards the Banks’ housing
goals. HERA amended section 1331 of
the Safety and Soundness Act to
provide that the Enterprise single-family
housing goals are limited to purchase
money or refinancing mortgages. See 12
U.S.C. 4561. Consistent with the
counting treatment for the new
Enterprise housing goals, the Bank
housing goals exclude home equity
loans from counting for purposes of the
housing goals. The Bank housing goals
also exclude other subordinate lien
mortgages, such as ‘‘piggy-back’’ loans
that may be acquired by a Bank along
with the corresponding first lien
mortgage. Subordinate lien mortgages
are excluded because it is difficult to
determine whether such loans are
purchase money loans or home equity
loans, and because first lien mortgages
provide a better measure of a Bank’s
support for residential housing.
Previously counted mortgages.
Section 1281.13(b)(9) of the final rule
prohibits the counting of mortgages
toward performance under the housing
goals if the mortgages have previously
been counted for purposes of the
performance of the Bank under the
housing goals. In order to limit
excessively burdensome recordkeeping
that could result, the rule makes clear
that this limitation only extends back
for five years. Although the Banks have
not previously been subject to housing
goals, this language is included for
applicability in future years.
Construction-to-permanent loans.
Section 1281.13(b)(10) of the final rule
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 81104 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
excludes purchases of mortgages
secured by properties that have not been
approved for occupancy from
consideration for purposes of the
housing goals.
Housing goals credit for certain
transactions. Section 1281.13(c) of the
final rule provides that certain types of
transactions shall be counted for
purposes of the housing goals, including
mortgages on cooperative housing and
condominium units, seasoned
mortgages, and refinancing mortgages.
Section 1281.13(c) does not include
certain types of transactions that are
eligible for housing goals credit under
the Enterprise housing goals, including
credit enhancements for goal-qualifying
mortgages, entering into risk sharing
agreements with federal agencies to
finance qualifying mortgages, and
purchasing mortgage revenue bonds
backed by qualifying mortgages. Such
transactions are not eligible for Bank
housing goals credit because of the more
limited scope of the approved AMA
programs. Section 1281.13(c) makes
clear that where a transaction falls
under more than one of the special
counting rules in § 1281.13(c), all of the
applicable requirements must be
satisfied in order for the loan to be
counted for purposes of the housing
goals.
HOEPA mortgages and mortgages
with unacceptable terms and
conditions. Consistent with the
proposed rule, § 1281.13(d) of the final
rule provides that HOEPA mortgages
and mortgages with unacceptable terms
and conditions must be counted in the
denominator as mortgage purchases but
may not be counted in the numerator,
regardless of whether the mortgages
would otherwise qualify based on the
affordability and other counting criteria.
This treatment is consistent with past
practice for the Enterprises and with
section 1332(i) of the Safety and
Soundness Act, as amended by HERA,
which provides that no credit may be
given for mortgages that FHFA
determines are ‘‘unacceptable or
contrary to good lending practices.’’ 12
U.S.C. 4562(i).
The proposed rule defined ‘‘mortgages
with unacceptable terms or conditions’’
to include mortgages with excessive fees
or interest rates, as well as mortgages
with prepayment penalties, mortgages
sold with prepaid single-premium credit
life insurance products, and mortgages
originated using practices that violate
erowe on DSK5CLS3C1PROD with RULES
fair lending laws or that are contrary to
the Interagency Guidance on
Nontraditional Mortgage Product Risks
(71 FR 58609) (Oct. 4, 2006), the
Interagency Statement on Subprime
Mortgage Lending (72 FR 37569) (July
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
10, 2007), or similar guidance
subsequently issued by federal banking
agencies.
A trade association commented that
FHFA should strengthen the terms and
conditions that constitute unacceptable
mortgages, and recommended the use of
Regulation Z and HOEPA rather than
interagency guidance to determine
whether a mortgage is eligible to be
counted under the housing goals. The
final rule does not change the proposed
definition of ‘‘mortgages with
unacceptable terms or conditions.’’
While the final rule specifically
references interagency guidance on
subprime and nontraditional loans,
FHFA expects the Banks to ensure that
mortgage loans they acquire comply
with Regulation Z and HOEPA, as well
as any federal law related to minimum
standards for mortgages and predatory
lending. As markets and abusive
practices evolve, FHFA may determine
additional terms and conditions to be
unacceptable.
FHFA guidance. Section 1281.13(e) of
the final rule provides that FHFA may
provide guidance on the treatment of
any transactions under the housing
goals. The guidance may be provided in
response to a request from a Bank, or at
the initiation of FHFA.
Private label securities. As discussed
in the proposed rule, because FHFA is
counting only mortgages purchased
through AMA programs in determining
each Bank’s housing goal performance,
and the Banks are not authorized to
purchase PLS through these programs,
PLS will not be counted in determining
a Bank’s housing goals performance.
Housing finance agency obligations
and other transactions. Consistent with
the proposed rule, the final rule
provides that only mortgages purchased
through AMA programs will count in
determining each Bank’s housing goal
performance. A trade association
commenter recommended giving the
Banks housing goals credit for Bank
advances and investments, including
transactions such as the purchase of
housing finance agency (HFA) bonds,
investment in housing-related bonds
and tax credits, and advances to HFAs.
The final rule does not expand the types
of transactions that will receive credit
under the housing goals to include
transactions, such as purchases of HFA
obligations, that are not AMA-approved
mortgage purchases. Expanding the
types of Bank transactions subject to
housing goals beyond AMA-approved
mortgage purchases would impede the
ability of the Banks to make an orderly
transition to the housing goals, because
it would entail the Banks collecting
information they may not currently
PO 00000 Frm 00018 Fmt 4700 Sfmt 4700
collect, and for some Banks, modifying
their activities involving HFAs.
E. Housing Goals Enforcement—
§§ 1281.14 and 1281.15
Consistent with the proposed rule,
§ 1281.14 of the final rule provides that
the Director shall determine whether
each Bank has exceeded the volume
threshold on an annual basis. For any
Bank that has exceeded the volume
threshold, the Director will also
determine whether the Bank has met the
housing goals, in accordance with the
standards established under the Safety
and Soundness Act, as amended by
HERA. If the Director determines that a
Bank has failed to meet any housing
goal, the Director shall provide notice to
the Bank in writing of such preliminary
determination.
Consistent with the proposed rule,
§ 1281.15 of the final rule includes
requirements for submission of a
housing plan by a Bank for failure to
meet any housing goal that is
determined to be feasible by FHFA. The
requirement to submit a housing plan is
at the discretion of the Director.
F. Reporting Requirements—§§ 1281.20
Through 1281.23
As required for the Enterprises, and
consistent with the proposed rule,
§§ 1281.20 through 1281.23 of the final
rule establish reporting requirements for
the Banks with respect to their housing
goals performance. Section 1281.21(a)
requires the Banks to collect and
compile computerized loan-level data
on each AMA-approved mortgage
purchased, as described in FHFA’s Data
Reporting Manual (DRM). These
reporting requirements apply to each
Bank, regardless of whether in a
particular year the Bank expects to
exceed the volume threshold and thus
be subject to the housing goals.
Section 1281.21(b) requires each Bank
to submit to the Director, on a semi-
annual basis, a Mortgage Report
containing aggregations of the loan-level
mortgage data for year-to-date AMA-
approved mortgage purchases, and year-
to-date dollar volume, number of units,
and number of AMA-approved
mortgages on owner-occupied
properties purchased that do, and do
not, qualify under each housing goal.
The loan-level data that must be
reported are currently collected by
FHFA on a semi-annual basis. As
advances in technology have made more
frequent submissions less burdensome,
FHFA will consider quarterly reporting
for the Banks in future years. Quarterly
reporting would be consistent with the
current requirements for the Enterprises.
The additional data provided facilitates
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FHFA’s monitoring of Enterprise
performance under the housing goals.
The Enterprises are also required to
submit Annual Housing Activities
Reports (AHARs) to FHFA. The final
rule does not require the Banks to
submit AHARs, but FHFA will consider
requiring such reports in the future.
Consistent with the proposed rule,
§ 1281.22 of the final rule requires each
Bank to provide to the Director such
reports, information and data as the
Director may request from time to time,
or as may be supplemented in the DRM.
As proposed, § 1281.23 of the final
rule sets forth the data integrity process
for Bank housing goals data. The final
rule requires the senior officer of each
Bank who is responsible for submitting
any report, data or other information for
which certification is requested by the
Director, to certify such report, data or
information. FHFA will determine on an
annual basis the official housing goals
performance figures for any Bank that is
subject to the housing goals, and may
resolve any error, omission or
discrepancy by adjusting the Bank’s
official housing goals performance
figure. If the Director determines that
the year-end data reported by a Bank for
a year preceding the latest year for
which data on housing goals
performance was reported to FHFA
contained a material error, omission or
discrepancy, the Director may increase
the corresponding housing goal for the
current year by the number of mortgages
that the Director determines were
overstated in the prior year’s goal
performance.
FHFA will implement the data
integrity process pursuant to its general
regulatory authority over the Banks.
FHFA expects that the Banks will work
cooperatively with FHFA to identify
and resolve any discrepancies or errors
in the housing goals data reported to
FHFA.
VI. Paperwork Reduction Act
The final rule does not contain any
information collection requirement that
requires the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
3501 et seq.).
VII. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
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number of small entities, small
businesses or small organizations must
include an initial regulatory flexibility
analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
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agency has certified that the regulation
will not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605(b). FHFA has
considered the impact of the final rule
under the Regulatory Flexibility Act.
The General Counsel of FHFA certifies
that the final rule is not likely to have
a significant economic impact on a
substantial number of small business
entities because the regulation is
applicable only to the Banks, which are
not small entities for purposes of the
Regulatory Flexibility Act.
List of Subjects in 12 CFR Part 1281
Credit, Federal home loan banks,
Housing, Mortgages, Reporting and
recordkeeping requirements.
■ Accordingly, for the reasons stated in
the preamble, under the authority of 12
U.S.C. 1430c, FHFA amends chapter XII
of title 12 of the Code of Federal
Regulations, by adding new part 1281 to
subchapter E to read as follows:
SUBCHAPTER E—HOUSING GOALS AND
MISSION
PART 1281—FEDERAL HOME LOAN
BANK HOUSING GOALS
Sec.
Subpart A—General
1281.1 Definitions.
Subpart B—Housing Goals
1281.10 General.
1281.11 Bank housing goals.
1281.12 General counting requirements.
1281.13 Special counting requirements.
1281.14 Determination of compliance with
housing goals; notice of determination.
1281.15 Housing plans.
Subpart C—Reporting Requirements
1281.20 General.
1281.21 Mortgage Reports.
1281.22 Periodic reports.
1281.23 Bank data integrity.
Authority: 12 U.S.C. 1430c.
Subpart A—General
§ 1281.1 Definitions.
As used in this part:
Acquired Member Assets (AMA)
program means a program that
authorizes a Bank to hold assets
acquired from or through Bank members
or housing associates by means of either
a purchase or a funding transaction,
subject to the requirements of 12 CFR
parts 955 and 980, or successor
regulations.
AMA-approved mortgage means a
mortgage that meets the requirements of
the AMA program at 12 CFR part 955,
and is approved to be implemented
under 12 CFR part 980, or successor
regulations.
PO 00000 Frm 00019 Fmt 4700 Sfmt 4700
81105
Balloon mortgage means a mortgage
providing for payments at regular
intervals, with a final payment (balloon
payment) that is at least 5 percent more
than the periodic payments. The
periodic payments may cover some or
all of the periodic principal or interest.
Typically, the periodic payments are
level monthly payments that would
fully amortize the mortgage over a stated
term and the balloon payment is a single
payment due after a specific period (but
before the mortgage would fully
amortize) and pays off or satisfies the
outstanding balance of the mortgage.
Bank means a Federal Home Loan
Bank established under section 12 of the
Bank Act (12 U.S.C. 1432).
Bank Act means the Federal Home
Loan Bank Act, as amended (12 U.S.C.
1421 et seq.).
Bank System means the Federal Home
Loan Bank System, consisting of the 12
Banks and the Office of Finance.
Borrower income means the total
gross income relied on in making the
credit decision.
Conforming mortgage means, with
respect to a Bank, a conventional AMA-
approved single-family mortgage having
an original principal obligation that
does not exceed the dollar limitation in
effect at the time of such origination and
applicable to such mortgage under 12
CFR 955.2(a)(1)(i) and 12 U.S.C.
1717(b)(2), as these sections may be
amended.
Conventional mortgage means a
mortgage other than a mortgage as to
which a Bank has the benefit of any
guaranty, insurance or other obligation
by the United States or any of its
agencies or instrumentalities.
Data Reporting Manual (DRM) means
the manual prepared by FHFA in
connection with the Banks’ reporting
requirements, as may be supplemented
from time to time, including reporting
requirements under this part.
Day means a calendar day.
Designated disaster area means any
census tract that is located in a county
designated by the federal government as
adversely affected by a declared major
disaster administered by FEMA, where
individual assistance payments were
authorized by FEMA. A census tract
shall be treated as a ‘‘designated disaster
area’’ for purposes of this part beginning
on the January 1 after the FEMA
designation of the county, or such
earlier date as determined by FHFA, and
continuing through December 31 of the
third full calendar year following the
FEMA designation. This time period
may be adjusted for a particular disaster
area by notice from FHFA to the Banks.
Director means the Director of FHFA,
or his or her designee.
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 81106 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
Dwelling unit means a room or unified
combination of rooms intended for use,
in whole or in part, as a dwelling by one
or more persons, and includes a
dwelling unit in a single-family
property, multifamily property, or other
residential or mixed-use property.
Families in low-income areas means:
(1) Any family that resides in a census
tract or block numbering area in which
the median income does not exceed 80
percent of the area median income;
(2) Any family with an income that
does not exceed area median income
that resides in a minority census tract;
and
(3) Any family with an income that
does not exceed area median income
that resides in a designated disaster
area.
Family means one or more
individuals who occupy the same
dwelling unit.
FEMA means the Federal Emergency
Management Agency.
FHFA means the Federal Housing
Finance Agency.
HMDA means the Home Mortgage
Disclosure Act of 1975 (12 U.S.C. 2801,
et seq.), as amended.
HOEPA mortgage means a mortgage
covered by section 103(aa) of the Truth
in Lending Act (15 U.S.C. 1602(aa)), as
amended by the Home Ownership
Equity Protection Act (HOEPA), as
implemented by the Board of Governors
of the Federal Reserve System.
HUD means the United States
Department of Housing and Urban
Development.
Low-income means income not in
excess of 80 percent of area median
income.
Median income means, with respect
to an area, the unadjusted median
family income for the area as most
recently determined by HUD. FHFA will
provide the Banks annually with
information specifying how the median
family income estimates for
metropolitan areas are to be applied for
the purposes of determining median
family income.
Member means an institution that has
been approved for membership in a
Bank and has purchased capital stock in
the Bank in accordance with 12 CFR
1263.20 or 1263.24(b), or successor
regulation(s).
Metropolitan area means a
metropolitan statistical area (MSA), or a
portion of such an area, including
Metropolitan Divisions, for which
median family income estimates are
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determined by HUD.
Minority means any individual who is
included within any one or more of the
following racial and ethnic categories:
(1) American Indian or Alaskan
Native—a person having origins in any
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of the original peoples of North and
South America (including Central
America), and who maintains tribal
affiliation or community attachment;
(2) Asian—a person having origins in
any of the original peoples of the Far
East, Southeast Asia, or the Indian
subcontinent, including, for example,
Cambodia, China, India, Japan, Korea,
Malaysia, Pakistan, the Philippine
Islands, Thailand, and Vietnam;
(3) Black or African American—a
person having origins in any of the
black racial groups of Africa;
(4) Hispanic or Latino—a person of
Cuban, Mexican, Puerto Rican, South or
Central American, or other Spanish
culture or origin, regardless of race; and
(5) Native Hawaiian or Other Pacific
Islander—a person having origins in any
of the original peoples of Hawaii, Guam,
Samoa, or other Pacific Islands.
Minority census tract means a census
tract that has a minority population of
at least 30 percent and a median income
of less than 100 percent of the area
median income.
Moderate-income means income not
in excess of area median income.
Mortgage means a member of such
classes of liens, including subordinate
liens, as are commonly given or are
legally effective to secure advances on,
or the unpaid purchase price of, real
estate under the laws of the State in
which the real estate is located, together
with the credit instruments, if any,
secured thereby, and includes interests
in mortgages. ‘‘Mortgage’’ includes a
mortgage, lien, including a subordinate
lien, or other security interest on the
stock or membership certificate issued
to a tenant-stockholder or resident-
member by a cooperative housing
corporation, as defined in section 216 of
the Internal Revenue Code of 1986, and
on the proprietary lease, occupancy
agreement, or right of tenancy in the
dwelling unit of the tenant-stockholder
or resident-member in such cooperative
housing corporation.
Mortgage data means data obtained by
the Director from the Bank or Banks
under this part and/or the Data
Reporting Manual.
Mortgage purchase means a
transaction in which a Bank bought or
otherwise acquired a mortgage.
Mortgage with unacceptable terms or
conditions means a single-family
mortgage, including a reverse mortgage,
or a group or category of such
mortgages, with one or more of the
following terms or conditions:
(1) Excessive fees, where the total
points and fees charged to a borrower
exceed the greater of 5 percent of the
loan amount or a maximum dollar
amount of $1,000, or an alternative
PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
amount requested by a Bank and
determined by the Director as
appropriate for small mortgages;
(i) For purposes of this definition,
points and fees include:
(A) Origination fees;
(B) Underwriting fees;
(C) Broker fees;
(D) Finder’s fees; and
(E) Charges that the member imposes
as a condition of making the loan,
whether they are paid to the member or
a third party;
(ii) For purposes of this definition,
points and fees do not include:
(A) Bona fide discount points;
(B) Fees paid for actual services
rendered in connection with the
origination of the mortgage, such as
attorneys’ fees, notary’s fees, and fees
paid for property appraisals, credit
reports, surveys, title examinations and
extracts, flood and tax certifications,
and home inspections;
(C) The cost of mortgage insurance or
credit-risk price adjustments;
(D) The costs of title, hazard, and
flood insurance policies;
(E) State and local transfer taxes or
fees;
(F) Escrow deposits for the future
payment of taxes and insurance
premiums; and
(G) Other miscellaneous fees and
charges that, in total, do not exceed 0.25
percent of the loan amount;
(2) An annual percentage rate that
exceeds by more than 8 percentage
points the yield on Treasury securities
with comparable maturities as of the
fifteenth day of the month immediately
preceding the month in which the
application for the extension of credit
was received;
(3) Prepayment penalties, except
where:
(i) The mortgage provides some
benefit to the borrower in exchange for
the prepayment penalty (e.g., a rate or
fee reduction for accepting the
prepayment premium);
(ii) The borrower is offered the choice
of another mortgage that does not
contain payment of such a premium;
(iii) The terms of the mortgage
provision containing the prepayment
penalty are adequately disclosed to the
borrower; and
(iv) The prepayment penalty is not
charged when the mortgage debt is
accelerated as the result of the
borrower’s default in making his or her
mortgage payments;
(4) The sale or financing of prepaid
single-premium credit life insurance
products in connection with the
origination of the mortgage;
(5) Underwriting practices contrary to
the Interagency Guidance on
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Nontraditional Mortgage Product Risks
(71 FR 58609) (Oct. 4, 2006), the
Interagency Statement on Subprime
Mortgage Lending (72 FR 37569) (July
10, 2007), or similar guidance
subsequently issued by federal banking
agencies;
(6) Failure to comply with fair lending
requirements; or
(7) Other terms or conditions that are
determined by the Director to be an
unacceptable term or condition of a
mortgage.
Non-metropolitan area means a
county, or a portion of a county,
including those counties that comprise
Micropolitan Statistical Areas, located
outside any metropolitan area for which
median family income estimates are
published annually by HUD.
Owner-occupied housing means
single-family housing in which a
mortgagor resides, including two- to
four-unit owner-occupied properties
where one or more units are used for
rental purposes.
Purchase money mortgage means a
mortgage given to secure a loan used for
the purchase of a single-family
residential property.
Refinancing mortgage means a
mortgage undertaken by a borrower that
satisfies or replaces an existing mortgage
of such borrower. The term does not
include:
(1) A renewal of a single payment
obligation with no change in the
original terms;
(2) A reduction in the annual
percentage rate of the mortgage as
computed under the Truth in Lending
Act, with a corresponding change in the
payment schedule;
(3) An agreement involving a court
proceeding;
(4) A workout agreement, in which a
change in the payment schedule or
collateral requirements is agreed to as a
result of the mortgagor’s default or
delinquency, unless the rate is increased
or the new amount financed exceeds the
unpaid balance plus earned finance
charges and premiums for the
continuation of insurance;
(5) The renewal of optional insurance
purchased by the mortgagor and added
to an existing mortgage; or
(6) A conversion of a balloon
mortgage note on a single-family
property to a fully amortizing mortgage
note where the Bank already owns or
has an interest in the balloon note at the
time of the conversion.
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Residence means a property where
one or more families reside.
Residential mortgage means a
mortgage on single-family housing.
Seasoned mortgage means a mortgage
on which the date of the mortgage note
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is more than one year before the Bank
purchased the mortgage.
Second mortgage means any mortgage
that has a lien position subordinate only
to the lien of the first mortgage.
Secondary residence means a
dwelling where the mortgagor maintains
(or will maintain) a part-time place of
abode and typically spends (or will
spend) less than the majority of the
calendar year. A person may have more
than one secondary residence at a time.
Single-family housing means a
residence consisting of one to four
dwelling units. Single-family housing
includes condominium dwelling units
and dwelling units in cooperative
housing projects.
Very low-income means income not in
excess of 50 percent of area median
income.
Subpart B—Housing Goals
§ 1281.10 General.
Pursuant to the requirements of the
Bank Act, as amended (12 U.S.C.
1430c), this subpart establishes:
(a) Three single-family owner-
occupied purchase money mortgage
housing goals, and one single-family
refinancing mortgage housing goal;
(b) A volume threshold for the
application of the housing goals to a
Bank;
(c) Requirements for measuring
performance under the housing goals;
and
(d) Procedures for monitoring and
enforcing the housing goals.
§ 1281.11 Bank housing goals.
(a) Volume threshold. The housing
goals established in this section shall
apply to a Bank for a calendar year only
if the unpaid principal balance (UPB) of
the Bank’s purchases of AMA-approved
mortgages in that year exceeds $2.5
billion.
(b) Market-based housing goals. A
Bank that is subject to the housing goals
shall be in compliance with a housing
goal if its performance under the
housing goal meets or exceeds the share
of the market that qualifies for the
housing goal. The size of the market for
each housing goal shall be established
annually by FHFA for each Bank district
based on data reported pursuant to the
Home Mortgage Disclosure Act for a
given year. Unless otherwise adjusted
by FHFA, the size of the market for each
Bank district shall be determined based
on the following criteria:
(1) Only owner-occupied,
conventional loans secured by property
located in that Bank district shall be
considered;
(2) Purchase money mortgages and
refinancing mortgages shall be counted
PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
81107
only for the applicable housing goal or
goals;
(3) All mortgages flagged as HOEPA
loans or subordinate lien loans shall be
excluded;
(4) All mortgages with original
principal balances above the conforming
loan limits for single unit properties for
the year being evaluated (rounded to the
nearest $1,000) shall be excluded;
(5) All mortgages with rate spreads of
150 basis points or more above the
applicable average prime offer rate as
reported in the Home Mortgage
Disclosure Act data shall be excluded;
and
(6) All mortgages that are missing
information necessary to determine
appropriate counting under the housing
goals shall be excluded.
(c) Low-income families housing goal.
For a Bank that is subject to the housing
goals, the percentage share of such
Bank’s total purchases of purchase
money AMA-approved mortgages on
owner-occupied single-family housing
that consists of mortgages for low-
income families shall meet or exceed
the share of such mortgages in the
market as defined in paragraph (b) of
this section.
(d) Low-income areas housing goal.
For a Bank that is subject to the housing
goals, the percentage share of such
Bank’s total purchases of purchase
money AMA-approved mortgages on
owner-occupied single-family housing
that consists of mortgages for families in
low-income areas shall meet or exceed
the share of such mortgages in the
market as defined in paragraph (b) of
this section.
(e) Very low-income families housing
goal. For a Bank that is subject to the
housing goals, the percentage share of
such Bank’s total purchases of purchase
money AMA-approved mortgages on
owner-occupied single-family housing
that consists of mortgages for very low-
income families shall meet or exceed
the share of such mortgages in the
market as defined in paragraph (b) of
this section.
(f) Refinancing housing goal. For a
Bank that is subject to the housing goals,
the percentage share of such Bank’s total
purchases of refinancing AMA-
approved mortgages on owner-occupied
single-family housing that consists of
refinancing mortgages for low-income
families shall meet or exceed the share
of such mortgages in the market as
defined in paragraph (b) of this section.
§ 1281.12 General counting requirements.
(a) Calculating the numerator and
denominator for the housing goals.
Performance under each of the housing
goals shall be measured using a fraction
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 81108 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
that is converted into a percentage.
Neither the numerator nor the
denominator shall include Bank
transactions or activities that are not
AMA-approved mortgage purchases as
defined by FHFA or that are specifically
excluded as ineligible under
§ 1281.13(b).
(1) The numerator. The numerator of
each fraction is the number of AMA-
approved mortgage purchases of a Bank
in a particular year that finance owner-
occupied single-family properties that
count toward achievement of a
particular housing goal.
(2) The denominator. The
denominator of each fraction is the total
number of AMA-approved mortgage
purchases of a Bank in a particular year
that finance owner-occupied, single-
family properties. A separate
denominator shall be calculated for
purchase money mortgages and for
refinancing mortgages.
(b) Missing data or information for the
housing goals.—(1) When a Bank lacks
sufficient data or information to
determine whether the purchase of a
mortgage originated after 1992 counts
toward achievement of a particular
housing goal, that mortgage purchase
shall be included in the denominator for
that housing goal and shall not be
included in the numerator for that
housing goal.
(2) Mortgage purchases financing
owner-occupied single-family properties
shall be evaluated based on the income
of the mortgagors and the area median
income at the time the mortgage was
originated. To determine whether
mortgages may be counted under a
particular family income level (i.e., low-
or very low-income), the income of the
mortgagors is compared to the median
income for the area at the time of the
mortgage application, using the
appropriate percentage factor provided
under § 1281.1.
(c) Credit toward multiple goals. A
mortgage purchase by a Bank in a
particular year shall count toward the
achievement of each housing goal for
which such purchase qualifies in that
year.
(d) Application of median income.
For purposes of determining an area’s
median income under § 1281.1, the area
is:
(1) The metropolitan area, if the
property which is the subject of the
mortgage is in a metropolitan area; and
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(2) In all other areas, the county in
which the property is located, except
that where the State nonmetropolitan
median income is higher than the
county’s median income, the area is the
State nonmetropolitan area.
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(e) Sampling not permitted.
Performance under the housing goals for
each year shall be based on a complete
tabulation of mortgage purchases for
that year; a sampling of such purchases
is not acceptable.
(f) Newly available data. When a Bank
uses data to determine whether a
mortgage purchase counts toward
achievement of any housing goal, and
new data is released after the start of a
calendar quarter, the Bank need not use
the new data until the start of the
following quarter.
§ 1281.13 Special counting requirements.
(a) General. FHFA shall determine
whether a Bank shall receive full,
partial, or no credit toward achievement
of any of the housing goals for a
transaction that otherwise qualifies
under this part.
(b) Not counted. The following
transactions or activities shall not be
counted for purposes of the housing
goals and shall not be included in the
numerator or the denominator in
calculating a Bank’s performance under
the housing goals, even if the
transaction or activity would otherwise
be counted under paragraph (c) of this
section:
(1) Purchases of non-conventional
single-family mortgages;
(2) Commitments to buy mortgages at
a later date or time;
(3) Options to acquire mortgages;
(4) Rights of first refusal to acquire
mortgages;
(5) Any interests in mortgages that the
Director determines, in writing, shall
not be treated as interests in mortgages;
(6) Mortgage purchases to the extent
they finance any dwelling units that are
secondary residences;
(7) Single-family refinancing
mortgages that result from conversion of
balloon notes to fully amortizing notes,
if a Bank already owns, or has an
interest in, the balloon note at the time
conversion occurs;
(8) Purchases of subordinate lien
mortgages (second mortgages);
(9) Purchases of mortgages that were
previously counted by a Bank under any
current or previous housing goal within
the five years immediately preceding
the current performance year;
(10) Purchases of mortgages where the
property has not been approved for
occupancy; and
(11) Any combination of factors in
paragraphs (b)(1) through (b)(10) of this
section.
(c) Other special rules. Subject to
FHFA’s determination of whether a
Bank shall receive full, partial, or no
credit for a transaction toward
achievement of any of the housing goals
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as provided in paragraph (a) of this
section, the transactions and activities
identified in this paragraph (c) shall be
treated as mortgage purchases as
described. A transaction or activity that
is covered by more than one paragraph
below must satisfy the requirements of
each such paragraph. The mortgages
from each such transaction or activity
shall be included in the denominator in
calculating a Bank’s performance under
the housing goals, and shall be included
in the numerator, as appropriate.
(1) Cooperative housing and
condominiums. The purchase by a Bank
of a mortgage on a cooperative housing
unit (‘‘a share loan’’) or a mortgage on a
condominium unit shall be treated as a
mortgage purchase for purposes of the
housing goals.
(2) Seasoned mortgages. The purchase
of a seasoned mortgage by a Bank shall
be treated as a mortgage purchase for
purposes of the housing goals, except
where the Bank has already counted the
mortgage under any current or previous
housing goal within the five years
immediately preceding the current
performance year.
(3) Purchase of refinancing mortgages.
The purchase of a refinancing mortgage
by a Bank shall be treated as a mortgage
purchase for purposes of the housing
goals only if the refinancing is an arms-
length transaction that is borrower-
driven.
(d) HOEPA mortgages and mortgages
with unacceptable terms or conditions.
The purchase by a Bank of HOEPA
mortgages and mortgages with
unacceptable terms or conditions, as
defined in § 1281.1, shall be treated as
mortgage purchases for purposes of the
housing goals and shall be included in
the denominator for each applicable
housing goal, but such mortgages shall
not be counted in the numerator for any
housing goal.
(e) FHFA review of transactions.
FHFA may determine whether and how
any transaction or class of transactions
shall be counted for purposes of the
housing goals. FHFA will notify each
Bank in writing of any determination
regarding the treatment of any
transaction or class of transactions
under the housing goals.
§ 1281.14 Determination of compliance
with housing goals; notice of determination.
(a) Determination of compliance with
housing goals. On an annual basis, the
Director shall determine whether each
Bank has exceeded the volume
threshold. For each Bank that has
exceeded the volume threshold in a
year, the Director shall determine the
Bank’s performance under each housing
goal.
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 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
(b) Failure to meet a housing goal. If
the Director determines that a Bank has
failed to meet any housing goal, the
Director shall notify the Bank in writing
of such preliminary determination. Any
notification to a Bank of a preliminary
determination under this section shall
provide the Bank with an opportunity to
respond in writing in accordance with
the following procedures:
(1) Notice. The Director shall provide
written notice to a Bank of a preliminary
determination under this section, the
reasons for such determination, and the
information on which the Director based
the determination.
(2) Response period.—(i) In general.
During the 30-day period beginning on
the date on which notice is provided
under paragraph (b)(1) of this section,
the Bank may submit to the Director any
written information that the Bank
considers appropriate for consideration
by the Director in finally determining
whether such failure has occurred or
whether the achievement of such goal
was feasible.
(ii) Extended period. The Director
may extend the period under paragraph
(b)(2)(i) of this section for good cause for
not more than 30 additional days.
(iii) Shortened period. The Director
may shorten the period under paragraph
(b)(2)(i) of this section for good cause.
(iv) Failure to respond. The failure of
a Bank to provide information during
the 30-day period under this paragraph
(b)(2), as extended or shortened, shall
waive any right of the Bank to comment
on the proposed determination or action
of the Director.
(3) Consideration of information and
final determination. (i) In general. After
the expiration of the response period
under paragraph (b)(2) of this section or
receipt of information provided during
such period by a Bank, the Director
shall issue a final determination on:
(A) Whether the Bank has failed to
meet the housing goal; and
(B) Whether, taking into consideration
market and economic conditions and
the financial condition of the Bank, the
achievement of the housing goal was
feasible.
(ii) Considerations. In making a final
determination under paragraph (b)(3)(i)
of this section, the Director shall take
into consideration any relevant
information submitted by a Bank during
the response period.
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§ 1281.15 Housing plans.
(a) Housing plan requirement. If the
Director determines that a Bank has
failed to meet any housing goal and that
the achievement of the housing goal was
feasible, the Director may require the
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
Bank to submit a housing plan for
approval by the Director.
(b) Nature of plan. If the Director
requires a housing plan, the housing
plan shall:
(1) Be feasible;
(2) Be sufficiently specific to enable
the Director to monitor compliance
periodically;
(3) Describe the specific actions that
the Bank will take to achieve the
housing goal for the next calendar year;
and
(4) Address any additional matters
relevant to the plan as required, in
writing, by the Director.
(c) Deadline for submission. The Bank
shall submit the housing plan to the
Director within 45 days after issuance of
a notice requiring the Bank to submit a
housing plan. The Director may extend
the deadline for submission of a plan, in
writing and for a time certain, to the
extent the Director determines an
extension is necessary.
(d) Review of housing plan. The
Director shall review and approve or
disapprove a housing plan as follows:
(1) Approval. The Director shall
review each submission by a Bank,
including a housing plan submitted
under this section and, not later than 30
days after submission, approve or
disapprove the plan or other action. The
Director may extend the period for
approval or disapproval for a single
additional 30-day period if the Director
determines it necessary. The Director
shall approve any plan that the Director
determines is likely to succeed, and
conforms with the Bank Act, this part,
and any other applicable provision of
law.
(2) Notice of approval and
disapproval. The Director shall provide
written notice to a Bank submitting a
housing plan of the approval or
disapproval of the plan, which shall
include the reasons for any disapproval
of the plan, and of any extension of the
period for approval or disapproval.
(e) Resubmission. If the Director
disapproves an initial housing plan
submitted by a Bank, the Bank shall
submit an amended plan acceptable to
the Director not later than 15 days after
the Director’s disapproval of the initial
plan; the Director may extend the
deadline if the Director determines an
extension is in the public interest. If the
amended plan is not acceptable to the
Director, the Director may afford the
Bank 15 days to submit a new plan.
(f) Enforcement of housing plan. If the
Director finds that a Bank has failed to
meet any housing goal, and that the
achievement of the housing goal was
feasible, and has required the Bank to
submit a housing plan under this
PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM
81109
section, the Director may issue a cease
and desist order, or impose civil money
penalties, if the Bank refuses to submit
such a plan, fails to submit an
acceptable plan, or fails to comply with
the approved plan. In taking such
action, the Director shall follow
procedures consistent with those
provided in 12 U.S.C. 4581 through
4588 with respect to actions to enforce
the housing goals.
Subpart C—Reporting Requirements
§ 1281.20 General.
This subpart establishes data
submission and reporting requirements
to provide the Director with mortgage
and other information relating to the
Banks’ performance in connection with
the housing goals, as supplemented
from time to time in the Banks’ Data
Reporting Manual (DRM).
§ 1281.21 Mortgage Reports.
(a) Loan-level data elements. To
implement the data collection and
submission requirements for mortgage
data, and to assist the Director in
monitoring the Banks’ housing goal
activities, each Bank shall collect and
compile computerized loan-level data
on each AMA-approved mortgage
purchase, as described in the DRM. The
Director may, from time to time, issue
a list in the DRM specifying the loan-
level data elements to be collected and
maintained by the Banks and provided
to the Director. The Director may revise
the DRM list by written notice to the
Banks.
(b) Semi-annual Mortgage Reports.
Each Bank shall submit to the Director,
on a semi-annual basis, a Mortgage
Report. The second semi-annual
Mortgage Report each year shall serve as
the annual Mortgage Report and shall be
designated as such. Each Mortgage
Report shall include:
(1) Aggregations of the loan-level
mortgage data compiled by each Bank
under paragraph (a) of this section for
year-to-date AMA-approved mortgage
purchases, in the format specified in
writing by the Director;
(2) Year-to-date dollar volume,
number of units, and number of AMA-
approved mortgages on owner-occupied
properties purchased by each Bank that
do, and do not, qualify under each
housing goal as set forth in this part;
and
(3) Year-to-date computerized loan-
level data consisting of the data
elements required under paragraph (a)
of this section.
(c) Timing of Reports. Each Bank shall
submit its first semi-annual Mortgage
Report within 45 days of the end of the
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 81110 Federal Register / Vol. 75, No. 247 / Monday, December 27, 2010 / Rules and Regulations
second quarter. Each Bank shall submit
its annual Mortgage Report within 60
days after the end of the calendar year.
(d) Revisions to Reports. At any time
before submission of its annual
Mortgage Report, a Bank may revise its
first semi-annual Mortgage Report for
that year.
(e) Format. The Banks shall submit to
the Director computerized loan-level
data with the Mortgage Report, in the
format specified in writing by the
Director.
§ 1281.22 Periodic reports.
Each Bank shall provide to the
Director such reports, information and
data as the Director may request from
time to time, or as may be supplemented
in the DRM.
§ 1281.23 Bank data integrity.
(a) Certification. (1) The senior officer
of each Bank who is responsible for
submitting the annual Mortgage Report,
or for submitting any other report(s),
data or other information for which
certification is requested in writing by
the Director, shall certify such report(s),
data or information.
(2) The certification shall state as
follows: ‘‘To the best of my knowledge
and belief, the information provided
herein is true, correct and complete.’’
(b) Adjustment to correct errors,
omissions or discrepancies. FHFA shall
determine on an annual basis the
official housing goals performance
figures for a Bank that is subject to the
housing goals. FHFA may resolve any
error, omission or discrepancy by
adjusting the Bank’s official housing
goals performance figure. If the Director
determines that the year-end data
reported by a Bank for a year preceding
the latest year for which data on
housing goals performance was reported
to FHFA contained a material error,
omission or discrepancy, the Director
may increase the corresponding housing
goal for the current year by the number
of mortgages that the Director
determines were overstated in the prior
year’s goal performance.
Dated: December 20, 2010.
Edward J. DeMarco,
Acting Director, Federal Housing Finance
Agency.
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[FR Doc. 2010–32350 Filed 12–23–10; 8:45 am]
BILLING CODE 8070–01–P
VerDate Mar<15>2010 13:10 Dec 23, 2010 Jkt 223001
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2010–0354 Airspace
Docket No. 10–AAL–10]
Establishment of Class E Airspace;
Port Clarence, AK
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; correction.
SUMMARY: This action corrects errors in
the legal description and airport
coordinates for Port Clarence Coast
Guard Station (CGS) Airport, Port
Clarence, AK, contained in a final rule
that was published in the Federal
Register.
DATES: Effective date 0901 UTC, January
13, 2011.
FOR FURTHER INFORMATION CONTACT:
Martha Dunn, AAL–538G, Federal
Aviation Administration, 222 West 7th
Avenue, Box 14, Anchorage, AK 99513–
7587; telephone number (907) 271–
5898; fax: (907) 271–2850; e-mail:
Martha.ctr.Dunn@faa.gov. Internet
address: http://www.faa.gov/about/
office_org/headquarters_offices/
ato.service_units/systemops/fs/alaskan/
rulemaking/.
SUPPLEMENTARY INFORMATION:
History
Federal Register Document FAA–
2010–0354, Airspace Docket No.
10–AAL–10, published on Tuesday,
October 12, 2010 [75 FR 62457]
establishes Class E airspace at Port
Clarence CGS Airport, Port Clarence,
AK. The airspace description referred to
the Anchorage Arctic CTA/FIR
boundary as a limitation of the western
boundary of the Class E airspace area.
This reference is in error and is
corrected by substituting the actual
coordinates of the boundary. The airport
reference point coordinates also
contained an error caused by rounding.
This action corrects that error. The
correct full legal description is provided
below.
Correction to Final Rule
■ Accordingly, pursuant to the authority
delegated to me, the Class E airspace
legal description for Port Clarence CGS
Airport, published in the Federal
Register, Tuesday, October 12, 2010
(75 FR 62457), FR Doc 2010–25479,
page 62458, column 2 is corrected as
follows:
AAL AK E5 Port Clarence, AK [Corrected]
Port Clarence, CGS Airport, AK
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(Lat. 65°15′12″ N., Long. 166°51′27″ W.)
That airspace extending upward from 700
feet above the surface within a 6.4-mile
radius of the Port Clarence CGS Airport, AK
and within 1.5 miles either side of the 180°
bearing from the Port Clarence CGS Airport,
extending from the 6.4-mile radius to 13.2
miles south of the Port Clarence CGS Airport;
and that airspace extending upward from
1,200 feet above the surface within a 73 mile
radius of the Port Clarence CGS Airport, AK,
excluding that portion extending west of a
line from Lat. 64°48′20″ N., Long. 169°31′27″
W., to Lat. 60°00′00″ N., Long. 168°58′23″ W.,
to Lat. 66°05′44″ N., Long. 168°58′23″ W.
Issued in Anchorage, AK, on December 13,
2010.
James M. Miller,
Acting Manager, Alaska Flight Services
Information Area Group.
[FR Doc. 2010–32293 Filed 12–23–10; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
15 CFR Part 950
[Docket No. 090113018–9019–01]
RIN 0648–AX74
Schedule of Fees for Access to NOAA
Environmental Data, Information, and
Related Products and Services
AGENCY: National Environmental
Satellite, Data and Information Service
(NESDIS), National Oceanic and
Atmospheric Administration (NOAA),
Department of Commerce.
ACTION: Final rule.
SUMMARY: In this final rule, NESDIS
establishes a new schedule of fees for
the sale of its data, information, and
related products and services to users.
NESDIS is revising the fee schedule to
ensure that the fees accurately reflect
the costs of providing access to the
environmental data, information, and
related products and services. NESDIS
is authorized under 15 U.S.C. 1534 to
assess fees, up to fair market value, for
access to environmental data,
information, and products derived from,
collected, and/or archived by NOAA.
Other than depreciation, costs to
upgrade computer hardware and
software systems will not be included in
the fees charged to users.
DATES: Effective Date: February 28,
2011.
FOR FURTHER INFORMATION CONTACT:
Angel Robinson (301) 713–9230 ext 186.
SUPPLEMENTARY INFORMATION:
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